A studio called Wanda: star role for China in Legendary deal

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Shanghai (AFP)

The multi-billion-dollar takeover of Hollywood's Legendary Entertainment by China's richest man will give American movie characters like Batman a privileged path into the world's second-largest film market.

Conglomerate Wanda Group, owned by tycoon Wang Jianlin, on Tuesday signed an agreement to buy the US film studio, maker of the latest Batman trilogy, Man of Steel and other blockbusters, for $3.5 billion.

Believed to be China's largest ever cross-border acquisition in the cultural sphere, it is the latest in a string of deals involving cashed-up Chinese companies making overseas investments in film.

In 2012, the then largely unknown Wang, whose personal fortune is now estimated at $31 billion, stunned the business world by buying US cinema chain AMC Entertainment for $2.6 billion.

"With his hot money in hand, he would like to expand, both in terms of controlling movie theatres like AMC as well as the content part of it," said Teng Jimeng, a professor of American studies and film at Beijing Foreign Studies University.

"He’s reaching out for expertise in content, in production and especially in co-production," he told AFP. "Co-production is becoming increasingly important for China."

China limits the number of foreign films imported into the country to just 34 annually.

But co-produced movies are not subject to the limits, and are entitled to a larger share of the box office.

Films with significant Chinese elements -- including characters, location and cast -- can also bypass the restrictions, leading some producers to shoot scenes in the Asian country, or include plot elements relating to it.

But the strategy can backfire, notably with the Chinese version of Iron Man 3, which was panned for clunky references to a Chinese milk drink.

Tuesday's deal should give future Legendary films direct access to the massive market, which has become crucial to foreign filmmakers with China's box office booming nearly 50 percent to reach $6.8 billion last year, according to government figures.

In 2014, China was the world's second largest box office with revenue of $4.8 billion, trailing only North America at $10.4 billion, according to the Motion Picture Association of America.

The success of the latest "Star Wars" instalment, which opened in China at the weekend, showed the importance of the market to global film releases, raking in $53 million for Disney in just two days.

"Now everyone is paying close attention to the Chinese market's box office potential," Amy Liu, senior vice president of Chinese entertainment research provider EntGroup, told AFP.

"This was certainly a very big incentive for Legendary."

- Strictly business -

But the acquisition has raised questions over how Wanda and other Chinese entities will balance censorship at home with appealing to global audiences.

China's authorities delete content deemed politically sensitive or pornographic, notably yanking Quentin Tarantino's "Django Unchained" as screenings began in 2013 and then resuming shows with cuts to a scene which showed star Jamie Foxx nude.

And Chinese companies have grander ambitions than the domestic market.

In September, private equity firm China Media Capital unveiled a venture with US entertainment giant Warner Bros. to develop films.

State-backed Hunan TV last year also announced a $1.5 billion agreement to fund the movies of US studio Lionsgate.

China's Huayi Brothers Media Corp. plans to jointly produce at least 18 films with US film and television studio STX Entertainment, while Chinese conglomerate Fosun International has taken a stake in US media company Studio 8.

Some detect the influence of the Chinese government in such deals, which hopes to portray a favourable image of the rising power.

But Wang denied Beijing's "soft power" drove the deal.

"I'm a businessman. Government soft power belongs to another sphere," he said, adding he was in the deal to make money.

But like other large private companies in China, ties to the government can be good for business. Wang has confirmed that Chinese President Xi Jinping's brother-in-law has owned shares in one of the group's companies.

Outside its core commercial property business, Wanda's interests range from entertainment to e-commerce. Last week, it announced plans to venture into healthcare by investing $2.3 billion in hospitals.

Deng Haozhi, chief analyst at property developer Fineland, told AFP: "Wanda is visionary in trying to shift away from real estate and position its business in fast growing emerging industries such as the movie sector, which is developing very rapidly in China."